site.btaOver 20% Drop in Number of Properties for Sale in Bulgaria

A drop of over 20% in the number of offers for sale of homes in Bulgaria has been reported since the beginning of the year. This is happening against a backdrop of steady and even growing demand and an increasing number of transactions. Activity in Sofia increased by 7% year-on-year, and in Varna and Plovdiv - by 8% and nearly 20% respectively. This is according to a report by Address Real Estate for the first half of 2024, received in BTA.

"We have seen a steady trend since spring - many people are delaying the decision to sell despite the high prices at the moment. On the secondary market remain those who have a plan to invest the funds later - another property or start a business. Property owners who do not need money urgently do not see a motive to part with their properties," said Gergana Tenekedjieva, the company's CEO.

In her words, if this trend continues in the conditions of growing demand, we will witness a classic seller's market.

"On the one hand, this would lead to further growth in house prices. On the other - developers will try to compensate for the shortage and new construction volumes will increase," Tenekedjieva added.

Only 10% of Address clients sold their property in the half year due to a need for cash. Around 18% of people are selling to buy, and over 30% are exiting a previous investment in a high price environment. The latter group was the largest of all sellers over the period.

"Expectations that inflation or financial difficulties would force many sellers off the market, and that prices would fall as a result, have not come true. Now, we are not even seeing potential factors that could lead to a decline," Tenekedjieva said.

Prices

The final transaction prices in Sofia for the period January-June 2024 increased by about 8%. In Plovdiv, the levels rose by 17%. Rises are also seen in Varna and Burgas, where many people are investing in a home to use as a second home by the sea.

Lending

Just over 40% of transactions in the period were with own funds, according to Address data. Of the purchases made with credit, nearly half were with a bank loan covering over 80% of the transaction value. The remaining 50% of people using a mortgage took out a loan for 30 to 80% of the property price.

"While banks are tightening lending criteria for borrowers, the amounts they are lending are still substantial. That is, not everyone can take out a loan anymore, but people with enough self-assurance and a stable income have no limits on the size of the loan," Tenekedjieva says.

Investment transactions

A total of 24% of the transactions in Sofia were for investment purposes, in Varna it was 21% of the purchases. In Burgas, about 30% of the homes were bought for investment purposes and in Plovdiv – 26%. According to Address consultants, after a short period of withdrawal of investment buyers as a result of rising prices, now they are back. These are people who have cash and prefer to invest it in a secure asset such as a property, even if their rental yields are not very high afterwards.

The most sought-after homes on the market continue to be one- and two-bedroom apartments. They account for over 75% of all transactions, and interest in both types is currently identical. Just over 5% of purchases in Sofia are garages, the average price of which is EUR 25,000.

The average age of a buyer in Sofia is 41 years. The male-female distribution is relatively identical, and the customers' field of work is in healthcare, construction, IT, trade, finance.